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tv   The Pulse  Bloomberg  August 10, 2015 4:00am-6:01am EDT

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francine: china stocks surge over speculation the government will merge. manus: doing a deal. greek officials are optimistic. a rescue package will be agreed today. inncine: vilest -- violence estimable. a police station attacked. -- violence in istanbul. manus: one of buffett's biggest. buying be close to precision castparts.
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♪ francine: welcome to "the pulse ." i am francine lacqua. manus: i am manus cranny. next 40 course of the minutes, we are joined by unicredit chief, it is erik nilsson in the house. francine: first, china stocks posted the biggest two day climb. manus: it rallied on news the government is considering shipping two major companies. francine: after data shows a large drop in it worse last month with the steepest decline in nearly six years. curranef economist enda joins us. what do the figures tell us about economy? enda curran: a very soft reading.
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some of china's biggest customers. illustrate how soft china's economy is when you strip away the impact of the big stockmarket boom we had in the second quarter. left with a lot of sluggish areas like manufacturing and factories and real estate sector. car sales falling for the first time in 17 years. to one ofn on exports the big engines of growth for china. into the second half of the year, pretty sluggish outlook right now. manus: let's talk about the currency. is it beginning to become a problem? could that be one of the arsenal of instruments that the pboc begins to focus on more? enda curran: well, it must be very tempting given how they like to meddle in the stock market and the temptation surely devaluing the exchange rate. on a basis, hurting their
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exporters and shipments to the likes of japan. the u.s. problems. it will help exporters but the problem if you do that, inmate trigger capital -- it might trigger capital outflow. a week exchange what not solve everything. it would help exporters build the temptation will be there for policymakers going forward. francine: how will policymakers respond to the data? what are we expecting? they have a well, lot of convention monetary policy left to cut interest rates and also take steps to promote lending by cutting requirements. but also beyond that, a lot of like in targeted lending
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we saw the bank of england and others do. re recapitalizing and in the banks to issue construction bonds to fund projects right around the country ticket projects off the ground in a higher labor and ensure the country meets the 7% growth target. keep an eye on the policy banks and how money, billions they spent on infrastructure projects going forward. for the bank enda curran, bloomberg's chief -- francine: enda curran, bloomberg's chief asian economies. the show.come to your thoughts out of the way, and a lot of data this week and some interviews with the fed. what worms and the most of moment? disinflation? oil prices? -- what worries you the most at the moment? guest: china.
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low inflation has proven to be fantastic. deflation risk is not there. ist a low inflation does increase his people really and drives the economy. the one thing that worries me the most is china. we went through it. not the mall and adjustment issues as they are facing print -- not small and adjustment issues they are facing that they do not seem to grasp. francine: we know they were going for a lower phase. having to goliking 180. what changing your mind? has it always been there? the factor there is volatility in the market? erik nielsen: on china, i do not know much has changed. the number of people talking about this big imbalance in the credit numbers. people would know china had to slow from 6%, 7% to
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2% or 3%. the thing we do not know is how fast it comes and the response. right now, it feels like it goes further than we thought. and this volatility in the market. a bit of a sideshow cooked -- compared to the fundamentals. manus: a couple weeks ago, about the stock market. from a retail perspective within china. here we are, what it seems is qe, china style. shovel ready lending. what do you make of the policy responses? are you concerned about the desperate nature? or i am misinterpreting? worried.sen: i am what it shows is they do not see where the problem is pretty the dentist to its percent of gdp. on and off again -- do not see the problem. that gb -- the debt is 200% of
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gdp. let's build more highways and what have you and that is not the solution. they have to bring the data numbers down to find another way of growing the economy. private consumption is the obvious and maybe exports. what we missed on the fx is they really want to get currency at the imf. francine: if this is your number one concern and the said'-- the fed's number one concern or number two after employment. will they wait to hike rates? : we will know this afternoon when you interviews stan fisher. [laughter] erik nielsen: my view is the u.s. numbers are across the board. if you look at some of the 10, 12 indicators for labor market, all of the things dancing around, the balance.
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it is screaming for rate hikes. number one, will it go september? he will not tell you. the question, is it a risk behind the curve? t would have to move faster. hey remember, in economy that does not matter if they go in july or december whatever. is at the speed thereafter. manus: you will stay with us. erik nielsen chief globe economist at unicredit. he stays with us. what else is on our radar. francine: let's start with turkey. turkish forces have exchanged fire with militants at istanbul. seven people including five policemen were wounded. that is according to the state-run agency. turk television said two men opened fire. greek government is aiming to conclude talks on a
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third bailout program by tomorrow. tot will lead enough time have the deal families -- have the deal and release for an august payment. francine: a watchdog looking at was cyberattacks all mobile retailer. the personal details and bank information of as many as two point met -- 2 million customers may have been access. manus: warren buffett may be on the verge of one of the reasons acquisitions. he is in talks to talk with precision castparts for it makes equipment for our space and energy industries. cap ofriday, a market about $27 billion. francine: the u.k. foreign ministry said african migrants -- many try to enter. a visit to singapore yesterday and philip hammond said "so long
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as their own large number of desperate migrants there will always be a threat to the security." live pictures. the italian coast guard. around 400rrying migrants rescued in the mediterranean sea on the docks at the sicily. the recurrent images pumped out around europe and all around greece. about ad about yesterday afternoon. francine: on top of the news across europe, a serious concern on how you deal with very desperate people. saying, the eu was not throw their weight around it. a more concerted effort. manus: stay with bloomberg. later on today, will be speaking with the federal reserve vice chairman families -- stanley alaner and former chairman
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greenspan pretty he knows about raising rates and implications. you do not want to miss of those interviews. francine: and brings us into the twitter question. what would you ask stanley fischer? you can tweet us. -- we alsost host have our guest host. manus: the latest on the shootings in istanbul. ♪
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francine: welcome back to "the pulse." manus: turkish security forces have exchanged fire with militants istanbul. hours after a police station was attacked by a car bomb. reporterng in our standing by in istanbul. elliott gotkine is our middle editor enjoys is in the studio. tell us what you know at the moment. turkish security forces have reportedly killed 2 militants in istanbul. a car bomb targets a police station. outskirts ofn the the city and one policeman and has reportedly been killed. 10 injured. the clash occurred when police
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went to investigate the scene and were fired upon. we're hearing neighboring buildings and cars have also been damaged. fire crews and police ambulances are in the area. it is unclear who is responsible for the attack. and a separate incident today, two people opened fire at the u.s. consulate in is simple. police return fire. -- consulate in instable. one of them, a woman was arrested. it is closed until further notice. francine: thank you for that. elliott is here. put it into context. it is very unclear. no one is claimed to the attacks and a lot of incidents. are they linked or not? who is: we do not know responsible at the u.s. consulate and the police station. it could be from different groups area -- a different groups. and the southeast of the country, a military helicopter
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came under fire from rockets and long-range weapons. a soldier in the helicopter was wounded and has since it died. three incidents so far today. incidents which authorities are blaming all militants from the workers party which is a militant group which turkey and the u.s. considers the turkish -- terrorist organization. we do not know this responsible for the other one. there's been a uptick in violence. italy after an attack last month, turkey launched airstrikes against militants over the border in syria. an attack against members of the pkk. up until i supposed recent hass, turkey and the pkk had a truce. there been peace talks. it seems to be suspended because of the turkish elections.
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what turkey finds itself in now is wearable for it was sitting this one out and not having the beef with islamic state and a .ruce with the pkk now, it seems to be fighting again on 2 for us. francine: elliott gotkine there. manus: can tsipras finalize greece's third bail out? the latest from athens. ♪
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francine: welcome back to "the pulse." manus: the greek government is hoping to complete a bail out negotiation this week. the creditors are expected to finalize by tomorrow. francine: after a 3.2 billion euro repayment is looming. the latest from mark spence than. why is greece presenting such an optimistic timeline? certainly, if it gets through parliament, at this point, well behind it. case butt always the
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it took for position that it needed to agree to reach an agreement with creditors. a very bitter pill to swallow. after making the decision. wanted to be done with it and move on. that's the government's position. effective economy has been in and politics in this over the negotiations says in the beginning of the year has been crippling. the greek point of view, the last thing they want is to meet the ecb redemption when another bridge loan. which is then raises the prospect of more months of negotiations rather than dealing with a next set of issues. like for example, from tsipras' point of view. of party andseries call a new elections was everything with the creditors is in agreement.
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he cannot do that until then. will they get a deal done? in terms ofsson: the actual negotiation, a couple of sticking points. one of which have to deal with loans a various banks creating a bad bank. prefer it goes through funds. it does perhaps the flip side of what i was optimistict greek about getting it done. some of the noise from germany saying, hey, what is the rush appeared -- rush. we could do all bridge loan and prolonged it for a few months to get up comprehensive deal done. of course, the greek point of view and comprehensive what it means is probably more conditions put in before a final deal can be put together.
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ands: marcus bensasson athens. thank you for setting the stage for this negotiations. francine: we are back with erik nielsen. greece, how much time do you worry about greece? it does not seem to have an impact on the market or rest of europe. erik nielsen: i spend very little time because it does not really matter. in my spare time, a lot of time because it is interesting. how europe deals with the sort of problems. from where life, outside of greece. europe is not really dealing with its problems, is it? admitre saying we have to it is not going to work. a fairly low baseline of trying to solve the problem. the imf does not blink and the -- believe it is going to work and the finns. why should we?
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: i think people are too pessimistic or i would not write it off. the previous program delivery growth eventually. gdp was too high. they had borrow money. gdp had to calm down. the program worked. we got positive growth and employment growth. about to see the success of this program coming along. we could debate. also the fabric cannot hold it because of the government and the mess and the world. now, in a new program where there will be less fiscal tightening because the primary as far as we know. secondly, the euro is a lot weaker than the previous programs. and trading partners in europe are doing better than that period of time. why are we so sure this problem does it work?
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better external environment. i am not sure it will but i would not write it all. francine if we do not get debt relief, does it mean you still think there is no chance greece leaving they euro by the end of the year? people not to worry now but in six months, the exact same discussion. you are optimistic it will work? you are not taking into account the possible grexit? erik nielsen: i do not think it they will lead. they decided as they do not like it and rightly so. that is really not a very risk to be honest. think it would i always hang over us. on the debt relief, the important thing is the debt service payments is not high. paying less as a share of and gdp as other countries. you have to use it when you have
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a these bikes down the road that have to be dealt with. they will be dealt with ideally. -- when you have these spikes down the road that have to be dealt with. people keep saying you have debt relief because the stock number. manus: even though it is a huge issue, are you a debt relief man? erik nielsen: you need debt relief. you need a bad bank. those are a little different. closely related. the banks need to be cleaned up very severely. asouple of them probably not in good shape as they shoot. it is pretty horrific if you ran a bank in greece. let's be honest. on the debt side, sir relief. that is not so urgent. the bank relief has to happen this year. -- on the debt side, a relief.
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francine: enda curran -- erik nielsen stays with us. ♪ first debate we talk about warren buffett and what could be his biggest deal to date. talk about: we warren buffett and what could be his biggest deal to date. ♪ the only way to get better is to challenge yourself,
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and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about.
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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. francine: welcome back to "the pulse." i am francine lacqua. manus: i am manus cranny. some of our top headlines. turkish security forces have a change fire with militants in istanbul hours after police station was attacked while carbone. five policemen were wounded in the attack. that's according to the state-run agency. cnn turk television said two gunmen opened fire at the u.s. consulate in a separate attack.
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francine: gunfire has interrupted protest in ferguson, missouri. it is the one-year anniversary of the shooting by a white police officer of unarmed black teenager michael brown. manus: chinese stocks posted a gain amid speculation that there will be mergers among state owned companies. the country is expected to emerge the two big and shipping companies. francine: data out show slowing demand for chinese goods. producer prices fell to the lowest level since 2009 and exports dropped by 8%. manus: warren buffett mayville the verge of one of the biggest acquisitions of his career. y precisionlks to bu castparts. capf friday, had a market
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of $27 billion. francine: more on that with elliott goggin. where does it rank with the others? outott: assuming it goes and around $30 billion, it would rank as number two. some reports suggesting it could be his biggest ever depend on the price per if it is $30 billion, behind the purchase of the burlington northern santa fe train at $36 billion. that included $9 billion of debt. what we can tell, precision castparts has $4 billion in debt. if you'd included in the $30 billion purchase. one of its biggest ever's. and half of the cash pile. about $37hathaway has billion of cash. this is one way of spending money. or have buying himself a
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birthday present. met's been a heck of a birthday present. -- manus: a half of a birthday present. francine: and it was manus' birthday. >> yay! manus: what do these guys do? you have to do real things. how will he handle that? is one of those companies you would refer to as all metal basher. more technology advance. precision parts for the aerospace industry and also oil andgas industry and pipes the like. the kind of industrial company that warren buffett likes to go for. the same unit as berkshire hathaway as the israeli company which was israel's biggest ever acquisition.
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one of's biggest overseas acquisition. that is the kind of areas he is into. that's one of warren buffett's biggest overseas acquisition. has $10 billion of revenue every year and an industry where it has relations with the bluest of blue chips. the life of general electric, airbus, boeing, the u.s. government among is largest customers. it takes a lot of time to get those kind of relationships and grout those types of partners. mr. buffett has noticed the share price. what it has not been doing so great of late and things is a great opportunity, 3% of the company to add to his holdings to take over the company. a long-term bet not talking about six months or a year. we're talking perhaps a bet that will not pay off until warren buffett is long gone.
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manus: thank you very much. a big deal. francine: the world's biggest natural oil producer had a rise in profits for the first time. falling fuel prices. . quicker look bloomberg's managing editor for energy and commodities and erik nielsen at the unicredit who stuck around. profit is up. when you look at the real picture, underlying concern. reporter: one, the first quarter, that into january through march. and currency is the main driver. the ruble. and that boosts gas results because the cost. the bigger problems mostly the oil price and the contracts linked to oil price. we are now starting to see lower oil prices. manus: erik nielsen, the whole
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debate about oil and commodities has different implications for various countries. emerging markets, balance a guess at the fed. for norway, a huge issue. one of the stories we're looking at at the sovereign wealth and what implications. where is the biggest issue for you as an economist? erik nielsen: a positive effect of consumers and businesses. the ocd area.uff, europe, japan, a big part of america. it bounces more evenly. those are the big parts of the world. because they are more energy efficient, it will continue to give you a downward pressure on the prices. demand will be a little bit softer. emerging markets in bigger trouble. financial part of the
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that will take of them down a bit in this kind of environment. you could be in for a long pedal of time, 10 or 15 years. is starting to change after the stories. francine: we're talking about gas at what you were saying and the projects that it has and the prospects, not a problem for the emerging markets will oil rich companies. will kennedy: a very ambitious plan a is trying to build under the black sea of turkey. this was ambitious when oil prices are up. to 100 dollars. it's looking unrealistic. a currency that has been hugely volatile and russia and one of the worst performers. oil prices under pressure. the move in the ruble. have we passed the worst of the
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russia story so far? erik nielsen: i do not think so, unfortunately. we talked about china earlier. russia's the other big concern. wealth coming down by 8%, 9%. the first was helped by the stimulus. they do not have the money because all the sanctions and they cannot borrow it and there is no money. the oil prices, if you are right and i think you're right, you have maybe go back to 60 bucks. to go highly unlikely over $70 for example. russia has major issues in my opinion. it goes to the rest of it. 10 years were they should've diversified and they have not and they are paying. francine: would you look at russia, what is the outlook? you have inflation all food prices.
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will it crumble to a point of no return? erik nielsen: there is always a return. not -- it is not good news for the prospect of a more liberal society and a sense or integrated. find, you have to find enemies in this environment. all of the russians are suffering now and not putin's faults. it remains to be seen. pure economics, it is difficult to be optimistic on russia for some time. gas, bring it back to you in terms of the debate about dividends the capital expenditures in this area. as they cannot and will not be immune to that challenge, will they? some of the: no, bigger oil companies like shell were will see them really the
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spending. it is cyclically driven. you look at the projects and tied to the ambitions of putin trying to get to china. to workknow, they have at. have to see. how much it matters over the economics. projectsome of these are unlikely to see the light of day and the timeframe. a final: erik, question. we were talking about greece. weak oil price and low euro. everything looked good for stronger europe? erik nielsen: the european recovery looks fine print over the next two quarters, we will see on friday. we think 0.4%. will kennedy: eight quarters of growth. 1.5%.ielsen: i think it will look celebrate but when the second part of this year and next year to 2%.
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it is lined up nicely. .taly is nicely it is coming. we'll wonder terrible, terrible time. fiscal policy is over. -- we got through a terrible, terrible time. francine: thank you. will kennedy as staying with us is erik nielsen. price up next -- the oil defense. -- deepens. a discussion coming up on "the pulse." ♪
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francine: welcome back to "the pulse." manus: oil has extended to the rigs,y as producers added they could -- and expect to continue pumping crude despite the global glut. francine price dropping to a six-year low. analyst, johning mayer and erik nielsen. welcome to the pulse. let's talk about this commodity. over the weekend, a whole variety of articles that china is beginning to stockpile. copper at a six-year low. iron or trying to replace his
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cell. china, could it be the savior of commodities? guest: china is the biggest consumer. why virtue, the biggest producer as well. yes, they tend to stockpile when prices hit a low levels. we see that in copper on a number of occasions and with expected that a variety of other metals as well. see metals as crude oil for their economic performance at metal prices are helpful to their economy. they want to protect themselves against the potential of future shortages. will send a protect themselves in the pass and get called out as well. -- we have seen them protect themselves in the past and get called out as well. it is an insurance policy. francine: is the yet -- worst yet to come for copper?
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quiteielsen: one never knows. china slowed down a lot. they decided they want to continue high production levels and told their industry they will support them with her exports. what it suggests to me is they are taking their foot off the br a and sell the stuff into the rest of the world and carry on producing. ke it will continue the industrial growth. as selloff the brakes stuff to the rest of the world and carol producing, it will continue the industrial growth. with spain to see more come -- we expect to see more come oujt. manus: a bit of a long shot. annualized around 2%. america has grown about 2.5%. if we take the balance, china's important, europe on an upswing
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and american trajectory improving. t balance what is happening in the story or not enough? erik nielsen: not enough. for every number a gdp produced in europe compared to in china, you use much less energy. more energy efficient in europe than the big emerging markets. for the same gdp of three and a half percent, a bigger is produced in europe, commodities will be less. as then what you are seeing in the markets right now. and the markets -- john meyer: at the markets are adjusting. we have seen that and the price. where do we bottom out? to the asianack crisis 15 years ago, it did not last very long. we are expecting to see china restimulated its markets and put itself back into a firmer growth in industrial production going
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forward. we have not seen it yet. we'll see them tinkering with lending rates and liberalizing that end of the market. and clearly supporting the stock market which is maybe 5%. those are important to moves. want to we are hearing is they want to continue with that strategy of restructuring industry and floating that into the marketplace. francine: what's your forecast for china gdp? it is still a mismatch. so growth prospects and the commodities. withmeyer: we would agree capital economic figures of more like 1.5%. there is a discrepancy of what we think israel and the official number. unfortunately, some of the growth is coming got the services sector which is the tough bid. we are focused on what production is going to be. it is difficult, it has slowed down a lot.
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what it means is commodities would expect in the deficit may end up in surpluses. these are the surpluses the china bureau will be buying into. john, can not lead to get off the platform without the gold. why not? [laughter] : i think gold is where it is for right now and it will get better. chinese domestic demand is very strong. rik is saying no. is 5 --er: regime beijing is buying up huge amounts of gold. : because of these purchases which are artificial, the game is over for gold. i think that will be several hundred bucks cheaper. theye bought it because thought the world was coming to
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an end a people realize it is not. [laughter] francine: john meyer, mining analyst and erik nielsen, chief global economy a unicredit. manus: hackers. embracing the dark side. cause more secure. a special report after the break. ♪
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manus: welcome back to "the
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pulse." francine: here are some of bloomberg's top headlines. the you can four k -- of the uk's foreign secretary said that african migrants pose a threat to the european way of living. philip hammond said as long as there are large numbers of desperate migrants there will be a threat to the security. said itecurity watchdog is looking into a cyber attack on a mobile phone retailer. as 4information force many million customers may have been accessed in the breach. francine this week brings us the perseid meteor shower. there should be little or no moonlight. it will be visible across the northern hemisphere and the brightest on august 12 wednesday to thursday. you can make wishes when you see
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falling stars. not technical. [laughter] manus: it should be interesting. it upgraded cyber security on the model s after hackers showed they could take control of the car's central computer. a look at how they did it. >> i'm a principal security researcher. hacker in my spare time. >> i am the founder of lookout. because we hacked a tesla to build safer cars in the future. musk is a real visionary and we want it to look at his car. was it a benchmark for the industry> were there any issues and if so, what are they? i hacked the iphone, google glass. the tesla? it took time. hacking to the
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car, we had to attack one system and get access to another system and gather more information and more information. we were able to get full control. >> that means you could do everything with the touchscreen. onk the trunk, h corner, switch the car off -- horn, switch of the car off. >> cars are more computers. and with that in mind, we have to think about cyber security issues just as safety issues of the car crashing. >> i am a hacker. that's why i hacked. if i am not, somebody else will. there are hackers that will do it maliciously. the vulnerabilities will be found. you want to be found a by the good guys.
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a software update we worked with the tesla took a pair. -- with tesla. we identify the problems. >> your car will be [indiscernible] our talk,time we give the vast majority of tesla's will be saved. with bloomberg, we will speak with stanley fischer and alan greenspan. you do not want to miss a those interviews. today's twitter question. what would you ask stanley fischer? at lacqua. first word is up next. theviewers, second hour of pulses up next. china stocks posted the biggest today gains and what is behind the rally. and in istanbul as violence
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flares up in turkey's largest city. and we we hear from greece and alexis tsipras, can be found allies the third bailout? all of that and much more on "the pulse." ♪
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amid: china stocks surge speculation the government will merge its two biggest shipping companies. outshines weak economic data. hopeine: greek officials and $86 billion rescue package will be finalized today. manus: in istanbul, an attack on a police station and government opened fire on the u.s. consulate. buffett said to be close to buying precision castparts for $30 billion.
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good morning to our viewers in europe. good evening to those of you in asia. a warm welcome to those of you waking up in the u.s. i am manus cranny. am francine lacqua. live from london. manus: china's stocks posted their biggest two-day again in almost a month in speculation mergers on thed way. the government combining two biggest shipping companies. francine: along with the steepest decline in shipping prices. joining us from hong kong, what do the figures tell us? on thery soft reading chinese economy. exports slumped to key customers
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like japan and europe. a little bit of a pickup in the u.s. was not enough to offset the decline. that slipped away -- got stripped away the narrative we've had recently that china's economy is stabilizing. it takes away the stock market rally we had in the first part of the year. real estate is soft. manufacturing and factory output is soft. the services sector and consumer is not enough to fill the gap left. it is a soft picture in china. talk abouts currency. we had eric nelson from any and he-- from unicredit said the backdrop to any discussion about tinkering with be predicated with the fact that they want to get into the imf. and they are not going to tamper with the yuan.
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enda: one of the reasons they cannot meddle with the yuan is they want that credibility to have the yuan as a reserve currency. they are faced with very severe near-term pressures on exporters. as they control the currency and on a trade weighted basis it is quite, has depreciated a lot over the last year. the imf itself does not consider it to be undervalued. the temptation must be there for the policymakers to weaken the currency. they need to consider it through the capital outflow angle, they do not want to trigger a rush of money leaving the country if they devalue. francine: the latest on china. some greek industrial production figures, falling 4.5% versus a year ago. we are looking at greece trying to find a resolution.
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knew it has been tough. but in terms of whether or not that brings closure to a successful bailout is something we need to keep an eye on. euro-dollar 1.964. manus: the most defining moment in the last hour, erik nielsen and regards to growth in greece, he said the next bailout should work. the last one showed up moderate signs of growth. all the data points are going to add. francine: we're looking at some bank stocks under pressure in athens. if you look at the stock exchange, it is gaining 2.8%. manus: let's move along. stocks in china, meanwhile, in brazil and china, mozambique, they are under the specter. a tough time in the emerging markets. the rout driven by the worst recession since the 1990's. aberdeen portfolio
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manager kevin davey, who oversees $13 billion. are we ready for a fed hike in emerging markets? is that the most important thing? or is it their own debt? kevin: it is one of the most important. 2.2%, theeasuries at market is not overly worried about the specter of the fed hiking in september. 60%ets are factoring in a probability of the fed tightening. the markets are taking it fairly relaxed at this point. francine: too relaxed? if you look at what the fed will do, the big unknown is what happens afterwards. they said everything will be gradual but if the unemployment numbers get better, we could be looking for steeper. kevin: no sign of inflation on
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the rise in the u.s. markets are reacting to any lack of price pressures. if that should change, the fed has to take a more aggressive stance. that is where the market gets caught run credit. -- caught wrongfooted. that is where you see stronger outflows from emerging markets. goes back to 2013 when we had a taper tantrum. markets were not expecting that. emerging market debt sold off sharply over two months. we are not envisioning a similar scenario given where we are with the fed. manus: if you look at china, there's a friday of things to be concerned about. one. is the implosion in commodity prices two is the implosion in growth. how does china bear in terms of contagion for the emerging markets. who are the most successful -- susceptible to china in em? kevin: we were talking about
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copper prices, that is having an impact on emerging markets. china imports around 40% of global copper. it is having a big impact on copper exporters, i.e. peru, zambia, another country going through pressures. copper prices at a six year low. you cannot blame china for oil, 7% of oil. china does have an impact on emerging markets sentiment. that is an important thing to highlight. if you look at where chinese growth slowdown, you saw the export data over the weekend, much worse than expected, down 8% year on year. this will have an impact on sentiment. to why also a backdrop treasuries are still lower at this point. the market is not expecting any signs of a big pickup in global demand and global growth.
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china has an impact. we can talk about currencies as well. china's impact on em currencies is pretty evident as well as the fed. francine: are you pessimistic about china? one previous guest thought it was growing at 4.5% this year, we are told it is growing at 7.5%. what is the number you are looking at? it cannot be blamed for china, it can be blamed for a lot of the rout. kevin: official numbers say 7%, most economists will tell you it is closer to 5%> a big reason why commodity prices are softer across the board. with the exception of oil, which has other dynamics in play. the chinese slowdown is pretty well telegraphed. the question is, to what extent can we see it stabilized? there were signs of stability
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in q2 with cyclical rebound happening in china. it is a concern in the backdrop for emerging markets. francine: talk about -- manus: talk about brazil. one thing you point out is the readjustment in brazil in terms of the deficit target. barely an eighth this year. they are beginning to adjust their perspective. kevin: brazil is going through a very sharp adjustment process. a shocker at this point a deep recession this year and a recession next year. the problem brazil is having, it is going through a political crisis. manus: second-worst performing currency against the dollar. kevin: the markets are moving towards concerns of an impeachment of president dilma.
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markets are worried about the probability of her getting force-out -- forced out. you have a political crisis amidst a big fiscal adjustment and a sharp slowdown in growth. brazil risk is increasing. interest rates are going up, inflation continues to go higher. inflation and fiscal deficit, the worst since 2003, which was the last time brazil was in a big crisis. markets are worried about the brazil story. the way we see it, this adjustment is necessary and brazil has to go through this process. the bottom line is, it is going to get worse before it gets better in brazil. francine: thank you for all that. kevin daly, portfolio manager at aberdeen asset management. manus: turkish security forces exchanged fire with militant in istanbul hours after the police station was targeted in a car bomb attack. seven people were wounded in the incident.
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that is according to state run news agency. cnn's turk television says two gunmen opened fire at the u.s. consulate in a separate attack. francine: the greek government aiming to conclude talks on its third bailout by tomorrow. that would leave time for the parliament to pass the deal and secure funds for an august payment to the european central bank. manus: the european central watchdog says it is looking to a cyber attack in carphone warehouse. ask information for as many 2.4 million customers may have been accessed in the breach. francine: warren buffett may be on the verge of one of the biggest acquisitions of his career. according to a person familiar with the matter, buffett is in talks to buy position cast parts, the company makes -- precision castparts, the company makes tools for the air industry and had a market cap of $27 billion.
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u.k. foreign secretary has claimed african migrants are a threat to the eu standard of living. after events at the channel tunnel. "so long asnd said, there are migrants around the area, there will be a threat to tunnel security." francine: later, we will be speaking with federal reserve bank chair stanley fischer and former fed chairman alan greenspan. it brings us to our twitter question. manus: if you had the chance to sit down with stanley fischer, what would you ask him? hashtag, #fed. francine: -- uscranny.and @man francine: the latest on the shootings in istanbul as violence flares. a live update. ♪
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manus: welcome to "the pulse," live from london. turkish security forces exchanged fire with militants in istanbul. hours after a police station was attacked by a car bomb. let's bring you the latest. standing by in istanbul and elliott gotkine is our middle east editor. give us an update, what is
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happening at the moment? >> turkish police have reportedly killed to militants in a shootoutts istanbul after a car bomb targeted a police station. one policeman has also lost his life and several people have been injured. the incident took place after the police returned to the incident to investigate and were .ired upon the surrounding buildings and cars have also been damaged. it is right now unclear who is responsible for these attacks. in a separate incident istanbul, the u.s. consulate has been targeted. two people opened fire on police forces. they returned fire and the attackers fled. we are hearing one of the attackers reportedly a woman, has been arrested. the u.s. consulate is closed until further notice. francine: thank you for that.
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elliott, this is a worsening condition in turkey. how concerned are we? we are seeing an upsurge in violence. islamic state has always been there on the border. the concern is the end of this three-year truce. , the talks with the pkk kurdistan workers party, which turkey and the u.s. view as a terrorist organization. there was hope that since the election of the pro-kurdish party winning representation in parliament, perhaps this would presage a new era. there would be no more worries about the autonomy and other concessions the kurds were looking for would lead to some agreement. now that has unraveled. three years of truce has unraveled.
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turkey has finally gone into battle against islamic state after really sitting this one out. not even allowing nato to use its air base in the south of turkey. that has changed since the suicide attack that happened last month blamed on islamic state. yesterday, u.s. warplanes were deployed to allow for more rapid reaction to what is going on on the ground in syria and iraq. manus: thank you very much. elliott gotkine on the latest from turkey. can alexis tsipras finalized third bailout this week? the latest from athens. stay with us. ♪
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francine: welcome back to "the pulse," live on bloomberg tv. the greek government hoping to complete bailout negotiations this week. european creditors are expected to have finalized the rescue package proposals by tomorrow. it comes with a 3.2 billion euro repayment to the ecb. let's get the latest from athens. why is greece presenting such an optimistic time frame for getting the third bailout wrapped up? the greek government does not want to rely on another bridge loan to meet the ecb redemption next week. took, the government took in
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july the decision to accept the framework byn the creditors. that was a big pill to swallow. they want that pill to go down as quickly as possible so they can move on. the fear with the bridge loan, the could end up letting process dragged on for a few months. more preconditions would come into play. totead, the government wants draw a line so you do not have the kinds of crippling uncertainty you had earlier, drawling out protracted negotiations. it could also move onto other priorities, including cleaning up shop to look like. with the members of and potentialty elections that might bring. francine: markets in athens. manus: the world's biggest
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natural gas producer gazprom has seen a 71% rise in gas prices. a weak ruble. will kennedy is managing editor energy and commodities. the profit up, this is balanced by currency. are we getting a real reflection of what is going on? will: probably not. a lot of this is down to the lower ruble. if they sell -- they sell in dollars and spent in rubles. in the past,g time january to march. lowerthen, the oil price, price of oil had a bigger impact on revenue. francine: how with the slump in oil price effect the future performance for gazprom. will: most of gazprom's contracts are linked to the
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price of oil, but it is with a lag. as we get to the second part of the year, it will be clearly felt. manus: has they touched on the capex?f dividend and they are not immune. will: they are building a pipeline to china. an expanded pipeline under the baltic sea. these cost billions of dollars. the question at gazprom is are all these realistic in a lower price environment? francine: what are we seeing for oil today. we heard from lg area they may be keen to do an emergency meeting. will: oil has fallen back quite sharply in recent weeks. some opec producers are going to get nervous. this is the divide we've seen in opec of policy being driven by saudi arabia and close allies in the gulf.
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other members are really hurting. algeria is calling for the emergency meeting. one of the highest oil prices to balance government spending. they want something to be done. manus: they are back in the bond market. a horrible thing, to tie up the saudi need to issue bonds with the price of oil. they've got to keep spending. it has a taste of maybe it is coming home to roost for saudi. pain saudi can take this longer than most opec members. it is the biggest economy in the arab world. they have not been big borrowers. they have been prudent by turning to the debt market now to give them breathing space. they have the capacity to see this through. maybe if it carries on, some policymakers will get nervous. francine: they might become more
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nervous. thank you. bloomberg's managing editor for for and commodities. manus: later, we have some great interviews you do not want to miss. federal reserve vice chair stanley fischer and the former fed chairman alan greenspan. which brings us to the twitter question of the day. francine: what would you ask stanley fischer? #fed. tweet us,@flacqua. when rates would rise. what i would ask, we don't know whether he's in a good mood -- kidding. what about his prospect for china? we've heard talk about the commodity fallout, what is real growth? view" haveomberg written a piece saying that is one of janet yellen's biggest issues, if the chinese begin to
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tinker with the reserve. francine: still to come, on china. market rallying on merger speculation. the details from hong kong, coming up next. ♪
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francine: welcome back to "the pulse," live from london. i am francine lacqua. cranny. am manus turkish secured he forces have exchanged fire with militants in istanbul, hours after the police station was targeted in a car bomb attack. 7 people, including five policemen, were wounded in the incident. according to the state run agency. two gunmen opened fire at the u.s. consulate in a separate attack. francine: gunfire has disrupted
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a protest in ferguson, missouri. the demonstration was marking the one-year anniversary of police shooting an unarmed teenager michael brown. a man opened fire at authorities and now is in serious condition after officers shot back. amid: chinese stocks gain speculation of mergers in state owned companies. the government is said to be considering merging two major shipping companies, which were suspended from trading today. francine: data out over the weekend shows slowing demand for chinese goods. producer prices fell to their lowest level since 2009. exports, a major mess, dropping more than 8%. hopinggreek government to pass bailout talks by tomorrow. that would leave time for foriaments to release funds
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an august 20 payment to the european central bank. francine: let's check in on the markets. this is how the weekend full of disappointing data is playing out. dax unchanged on the periphery. gains of .2%. .9%. 100 down by falling over. anglo-american down 2.5%. shp billiton among miner trading lower. when you compare the moves on the ftse and how they weekend full of disappointing chinese data is playing out compared to china itself, the shanghai composite having gains overnight. up 4.9%. there's the move. i don't think the price on this screen is correct. they guessed gain in a month. as you've been talking about,
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not so much about data, speculation the government will accelerate mergers between state owned enterprises. that is what gave the shanghai composite a lift. that and may be the bad news-goodness scenario. bankdea that the people's of china will have to do more. it is the miners getting hit across stoxx 600. brent crude down for a fourth day and just turning positive on a three-day losing streak. $48 a barrel coming off of six weeks of declines, the longest losing streak since january. fx market, one thing to watch, the dollar trading sideways. a huge interview with a certain tom keene. i know you are going to be talking to him. francine: let's go straight to him. in 25 minutes, it is "surveillance." tom keene joins us from washington, d.c. about an excited
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amazing lineup of guests. tom: stanley fischer and alan greenspan. what is interesting, will really struggling to find a bid. what i have noticed is negative interest rates in germany. the canary in the coal mine. we will touch on these themes with stanley fischer, a public officer. he's got to be careful what he says. we dive in to the global conundrum with alan greenspan. he's beyond concerned about a bubble that could be out there. we will touch upon that with the former chairman. and of course, not to be outdone, you've got a guest who knows a thing or two about raising interest rates in his own right. alan greenspan what will this, rate hike cycle look like? will touch on that with
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alan greenspan. much less so with stanley fischer. waste i don't want to time asking questions that cannot get answered. we can talk about where they "ultras phrase, accommodative." you sought mark carney deal with that. a challenge how the u.k. and u.s. begin to raise interest rates and the path from there is the big issue as well. manus: tom, have a good one. we look forward to those interviews. fran and i are going to be tweeting everything. two great interviews that nobody wants to miss. francine: china stocks may have posted their biggest two-day gain in almost a month. inflation data shows there was a in exports last month when the country saudis steepest decline -- saw the steepest decline in nearly 60 years.
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from standard charter and joining us in hong kong, how do you interpret the movement? >> we see a weak spot following a broad-based sign in previous demand. there's 3 billion that is disappointing. that is because of the high base in last july. inflation started to rise. what would be the assessment of the government? we think the government appears to be more worried about downside risk to growth than upside risks to inflation. that is indicated in the quantity of monetary policy publishedthe pboc last friday. we continue using buyers of policy, including fiscal policy, that will be conducted through policy banks. with those policies, we continue to expect a moderate rebound of real activity in the second half. manus: good day. manus here. is that the right policy
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response? we've had a discussion on "the pulse" with other guests who say this is rerunning the mistakes of the past in terms of boots on the ground and infrastructure projects. this is not the right response to put a floor under growth. what would you say? there is aould say delicate balance the government needs to strike. and the central bank especially are worried about both the growth risk and the risk of continued increase of the debt ratio of the economy. in the first half of the year, the nominal gdp only grew 6.5%. debt and credit growth continue to grow by more than 10%. the debt ratio continues to rise. that is why we do not expect major stimulus from the government. all the government has been doing is measured and targeted
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measures of supportive measures. including supporting the infrastructure investment through the policy banks. on the other hand, they already contained the local government debt that constrained the local governments' abilities to invest. francine: if we take a step back, what do you think is the correct figure, the real figure of china growing? i've heard from 3.5% to 6.5% here. shuang: the official is actually about right, contrary to a lot of people, what people believe in the markets. growth in at the 7% the second quarter, if we make a breakdown of the growth, my assessment is that the real growth is close to 6%. the financial activity, especially the above normal financial activity, above normal stock market transactions
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contributed to it, 1 percentage point to the 7% of growth. manus: one question for me is happy stock market rout and slowdown -- how the stock market rout and slowdown has been a good thing in terms of pushing out shadow banking. reducing shadow banking. shuang: i think the shadow banking has been tightly regulated since the middle of last year. from the official finance data, we see a shrink in shadow banking. the government would like to see a rally of the stock market which could actually help finance the economic growth and reduce reliance on the banking system, including the reliance on shadow banking. it seems to me that the government has been too anxious to boost the stock market, which
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caused the corruption we've seen recently. francine: we have a story today on the bloomberg terminal saying china has been slashing u.s. debt by $180 billion, how do you see that panning out? --ang: we need to take this put this in perspective. a few years ago, chinese credit growth was close to 20%. currently, if we look at the renminbi credit growth, it is 12% to 13%. the title social financing growth is -- the total social financing growth is below 12%. still relatively high compared to the nominal growth. the rate of leveraging of the economy has slowed. challenge ofaces a eventually deleveraging the economy. manus: shuang ding, standard
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chartered's chief economist in hong kong, thank you. buffett andwarren potentially his biggest deal ever. details after the break. ♪
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francine: welcome back to "the pulse," live from london on bloomberg tv. manus: top headlines. the u.k. foreign secretary has claimed african migrants pose a threat to the eu standard of living and social structure. comes as many try to enter britain by the channel tunnel. speaking to the bbc, philip hammond said "so long as there are large numbers of desperate arounds maraudering the area, there will always be a threat to tunnel security." francine: an eu watchdog is looking into a cyber attack on carphone warehouse. personal details and bank information for as many as 2.4 million customers may have been accessed. manus: warren buffett in talks parts,precision
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acquiring the company could add $10 billion in annual revenue and employees to berkshire hathaway. francine: let's get more with elliott gotkine. rounding up all the news. where does this deal rank compared to the others done by warren buffett? elliott: depending on the final price when the deal goes through, talking about $30 billion, it would be number two behind the northern santa fe railroad, which came in at $36 billion. this would be number two. -heinz.hat comes kraft warren buffett and berkshire hathaway, it is nothing new for them to do a deal of this size. it would be one of the biggest deals ever. a nice birthday present ahead of his birthday at the end of this month. manus: they make stuff. elliott: they make turbine arrow
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fors, valve bolts and nuts airplanes. they're involved in the oil and gas industry. industry company. technologically advanced. what warren buffett likes is they are long-term bets. he's not looking for a six month or one year turnaround. this might not pay off until he has gone up to where ever it is in the sky. we are talking about a company that has high barriers to entry, some of the bluest blue chips among customers -- general electric, boeing, airbus, the u.s. government and samsung. it takes a long time to develop relationships. high barriers to entry with other companies. seemsher thing is there in the stock market, shares down almost a fifth over the past 12 months. he may feel the price is right.
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francine: this is reducing the reliance on stockpicking to mutual funds. this is now an industrial play if you want to get into berkshire hathaway. when you look at the oil price, you think may be eating not want to go into machinery linked to that. this is a 10 year or 20 year review? elliott: decades long is one .uote we have got as you said, traditionally for the years warren buffett has been in charge of berkshire hathaway, it has been focused on insurance and stockpicking. over the last few years, this acquisition or an israeli company, they've been shifting towards a heavy industry model. these are big bets, they pay off big over the long-term. investors do not seem to mind. such a move.ome
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not least because when we had results from berkshire hathaway friday, missing estimates because of more claims than usual in the insurance division. manus: this is the longer-term play you mentioned. buffett has already taken more in dividends from the railroad business than he paid in cash to complete the deal. he took the rest of bnsf. it's about long-term income. that is what many people buy that stock for, even though it is expensive. elliott: what warren buffett said at the time of the bnsf acquisition, this was a that on the u.s. economy. cases where the economy is firing on all cylinders, he certainly believes the u.s. economy is going to be among the most dynamic in the world. to have some of the best companies in the world. that is what he's betting on.
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this acquisition, if it goes company, thatis is something he will be looking to get. forget about oil prices, short-term fluctuations, forget about share prices and quarterly returns. this is a focus on the long-term, a big bet over the long-term. francine: elliott gotkine with the latest on the possible buffett deal. manus: next, helped by the hackers. tesla embraced the dark side to make cars more secure. a special report after the break. ♪
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francine: welcome back to "the pulse," live on bloomberg tv. manus: tesla says it has upgraded cyber security on its model s after hackers showed they could take control of the car's computer. here's a look at how. >> i and a security researcher. i am a hacker at my spare time. >> i am the founder and cto of lookout. i am here because we hacked a tesla to build safer cars in the future. >> elon musk is a visionary. we wanted to look at his car and
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see how good was it. was it a benchmark for the industry. were there any issues? what were they? i've hacked the iphone, google glass. tesla took a little time. >> it was not simply about hacking the car. we had to attack one system, gather information, use that to get access to another gather more information and finally get more. we were able to get full control over the infotainment. >> that means you can do everything the touchscreen ui honk theop the trunk, horn, flash the headlights, unlock and lock the car, switch the car off. >> the biggest take away is that cars are computers. your car has more in common with your laptop than it does the model t. with that in mind, we have to think about cyber security issues as much as safety issues
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with car crashes. >> things get hacked all the time. that is why i hacked the tesla. if i am not hacking it, someone else is going to be. goingare hackers who are to do this maliciously. vulnerabilities will be found. you want them found by the good guys. >> this is the software update we worked with tesla to prepare to fix vulnerabilities we identified as part of our research. >> all you have to do is click install now or install overnight and your card will be -- it pushes out quickly. >> by the time we give our talk, the majority of teslas will be safe. francine: this week brings us the annual perseid meteor shower. there should be little or no moonlight. the event will be visible across the northern hemisphere at its brightest on august 12, wednesday and thursday. manus: you are supposed to make a wish.
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francine: you are. manus: there you go. keep your eyes peeled for that. elon musk, this is a little different. this is what we should get up to over the weekend. francine: i'm not elon musk. manus: he went for a walk. it was not your average stroll. the spacex founder and his wife walked on the wing of a biplane. francine: a british company lets you do the start for $650. his instagram caption, "what could go wrong"? i don't know how much he paid. well done him and his wife to stay with bloomberg tv. speaking with stanley fischer and alan greenspan. those are the two interviews i'm going to be watching out for. stanleyndon time for
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fischer. alan greenspan, 12:30. surveillance is done out of washington, d.c. today. manus: tom keene has both of those. high on the priority in the absence of when the next hike is going to come. opportunity. join us on twitter. we are @flacqua and @manuscranny. what do the markets want to know? oil? what is dominating the thoughts of the current vice chair of the federal reserve? francine: that is it for "the on bloomberg tv and stay tuned for "surveillance." let's have a quick asset check the european stocks falling for a third day. they opened higher, they are now lower. energy dropping. we talked about oil, will kennedy on this. manus: miners under pressure. gdp numbers at the end of the
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week. will it be the ninth straight quarter of growth? ♪
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announcer: this is "bloomberg surveillance." tom: german and swiss yields plunged. oil continues to not find the bid. the global economy considers deflation. america stands alone this
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morning. stanley fischer -- alan greenspan on a less productive america. and warren buffett -- you know he loves food stocks. berkshire hathaway shows ultimatein the precision cash parts. it is monday, august 10. i'm tom keene and washington. joining me, brendan greeley and vonnie quinn, in new york. we consider -- we continue to see the low interest rates. to me they are the canary in the coal mine. howdan: we've research on investors look at europe, and they are going to be asking for a higher risk premium coming up very soon for corporate debt. we will see some divergence there as well. vonnie: -26 basis points for the german two-year yield. is average two-year yield minus


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